The Royal Association of British Dairy Farmers (RABDF) is urging the Government ahead of next week’s budget not to remove the subsidy for red diesel in agriculture over fears it will have grave consequences for the sector.

The association has sent a letter to Secretary of State for Environment, Food and Rural Affairs, George Eustice, warning him of the implications it will have on dairy farmers if the subsidy is removed.

Currently, the duty levied on red diesel is 11.1p, compared to 57.7p for standard fuel. Agriculture accounts for about 7% of the total lower rate fuel use in the UK.

If the subsidy is removed it stands to raise an additional £2.4bn for Government as well as helping them reach the net-zero emissions goal by 2050.

However, the implications for dairy farmers could be huge.

RABDF Chairman Peter Alvis said: “The Government must understand that farmers and contractors have no alternative to red diesel, so removing the levy would hit them hard.

“Not only will it affect them directly in their own fuel costs, it will also result in other fuel-related price increases including contractors and fertiliser.”

He also warned if the subsidy was removed that consumers and the rest of the supply chain must be faced with meeting the increasing costs.

He added: “UK agriculture is already making great strides in reducing emissions and is on course to meet the net-zero targets 10 years ahead of schedule. Adding in yet another cost for dairy farmers will only hamper the good work they are already doing.”

Shadow Minister for Rural Affairs and farmer Andrew RT Davies has also raised concerns about the move and has written to the Chancellor of the Exchequer, Rishi Sunak, requesting the subsidy for red diesel for agricultural use is retained.